Has This Become A “Short Everything In Sight” Market?

By John Rubino – Re-Blogged From Dollar Collapse

One of the strangest things about this strangest-ever expansion has been the way pretty much everything went up. Stocks, bonds, real estate, art, oil – some of which have historically negative correlations with others — all rose more-or-less in lock-step. And within asset classes, the big names behaved the same way, rising regardless of their relative valuation.

This seemingly indiscriminate buying created a paradise for index funds that simply accumulate representative assets in their chosen sectors. And it made life a nightmare for the higher-order strategies of hedge funds that get paid to beat the market.

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The Stock Market Economy

By Peter Schiff – Re-Blogged From Euro Pacific Capital

Currently, some market watchers have begun to openly question whether the bull market in stocks has finally come to an end. They certainly have cause to worry. Valuations are frothy after a record run-up in the last few years. Bond yields across the yield curve are rising sharply, as the Fed Funds Rate breaks into territory not seen since before the market crash of 2008. Much higher costs of capital are already putting pressure on rate-sensitive industries such as housing and autos. The boost to earnings provided by the corporate tax cuts will fade and rising prices resulting from past monetary policy and import tariffs may be expected to slow consumption and take a toll on balance sheets. All this points to possible lackluster performance, with stocks essentially flat so far this year.

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Dow Jones’ Earnings Are At Record Highs

By Mark J. Lundeen – Re-Blogged From Gold Eagle

The Dow Jones saw some action this week. Wednesday, the day after the mid-term elections it advanced by 2.13% from its previous day’s closing price, our fourth day of extreme volatility since early October. Everyone was happy about the nice daily gain. But I’m only noting that days of extreme market volatility (Dow Jones 2% days) are in the main bear-market phenomenon, be they negative or positive.

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“Black Swan” Author Just Issued a Powerful Warning About Global Debt

By Frank Holmes – Re-Blogged From Gold Eagle

The world is more fragile today than it was in 2007. That’s the opinion of former derivatives trader Nassim Taleb, whose bestseller, The Black Swan, is about how people make sense of unexpected events, especially in financial markets. True to form, he made a whole lot of money after predicting the global financial crisis more than a decade ago.

Speaking with Bloomberg’s Erik Schatzker last week, Taleb said the reason why he has reservations about today’s economy is that it suffers from the “same disease” as before. The meltdown in 2007 was a “crisis of debt,” and if anything, the problem has only worsened.

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Bond Bubble Conundrum

By Michael Pento – Re-Blogged From Silver Phoenix

Wall Street shills are in near perfect agreement that the bond market is not in a bubble. And, even if there are a few on the fringes who will admit that one does exist, they claim it will burst harmlessly because the Fed is merely gradually letting the air out from inside. However, the fact that we are in a bond bubble is beyond a doubt—and given the magnitude of the yield distortions that exist today, the effects of its unwinding will be epoch.

Due to the risks associated with inflation and solvency concerns, it should be a prima facie case that sovereign bond yields should never venture anywhere near zero percent—and in some cases, shockingly, below zero percent. Even if a nation were to have an annual budget surplus with no inflation, it should still provide investors with a real, after-tax return on government debt. But in the context of today’s inflation-seeking and debt-disabled governments, negative nominal interest rates are equivalent to investment heresy.

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Where Were You 31 Years Ago?

By Michael Ballanger – Re-Blogged From Gold Eagle

Q: How do you get your broker out of a tree?
A: Cut the rope.
—Common joke from October 1987

It was 31 years ago, on Oct. 19, that I watched a $300,000 stock portfolio begin to vaporize, with a Monday loss of 35% morphing into a 93% amputation by the end of the week, the remaining cash balance totaling slightly over $16,000.

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Gold-Stock Sentiment Shifting

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks have been largely ignored and neglected for years. Speculators and investors wanted little to do with them for various reasons. But that apathetic sentiment is finally starting to shift thanks to last week’s stock-market plunge. Capital is starting to return to this battered sector as traders begin to realize how radically undervalued it is. Sentiment mean reversions can catapult gold stocks far higher.

Sentiment is defined as “a thought, view, or attitude, especially one based mainly on emotion instead of reason”. We humans are inherently-emotional creatures riddled with sentiment on almost everything. That’s especially true in our perceptions of the financial markets, which heavily influence if not dominate our trading decisions. We buy and sell stocks when it feels good, when markets appear to validate our outlooks.

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